In a landmark move for the global fashion industry, Prada Group has announced the acquisition of iconic Italian fashion house Versace from U.S.-based Capri Holdings in a deal valued at $1.4 billion (1.25 billion euros). The deal, revealed on Thursday, unites two of Italy’s most celebrated luxury brands in an effort to bolster the country’s influence in a sector long dominated by French conglomerates.

The acquisition, which has an enterprise value of $1.375 billion, marks a strategic expansion for Prada, which has continued to grow despite a broader slowdown in luxury demand. Versace, meanwhile, has been operating at a loss under Capri Holdings, which also owns Michael Kors and Jimmy Choo.

“We aim to continue Versace’s legacy celebrating and re-interpreting its bold and timeless aesthetic,” said Prada Chairman Patrizio Bertelli. “At the same time, we will provide it with a strong platform, reinforced by years of ongoing investments and rooted in longstanding relationships.”

The sale represents a significant markdown from the price Capri Holdings paid in 2018—roughly $2.15 billion including debt—when it acquired Versace from the founding family and private equity firm Blackstone. At the time, the move was seen as an attempt to create a U.S.-based luxury powerhouse to rival European giants.

However, Capri has struggled to reposition Versace during the rise of the “quiet luxury” trend, which favours minimalist sophistication over the brand’s signature bold patterns and sexy silhouettes.

The deal gives Prada not just creative control over Versace’s storied heritage, but also a strategic foothold to better compete on the global stage—particularly against French titans like LVMH and Kering.

The acquisition is expected to reshape the luxury landscape and marks a new era for Italian fashion dominance.